Technogies is a $ 4. 4 billion company catering to IT Systems management & security software solutions for mainly the Fortune 2000 companies. CA’s mainframe business accounted for 60% of their revenues & bulk of it’s profits. CA used acquisitions to expand its portfolio in mainframe business as well as venture into client-server and distributed computing. In distributed computing although the upfront costs were less while providing flexibility, reliability and risk mitigation, the subsequent recurring manpower cost was very high vis-a-vis mainframe. But the technical know-how for maintaining mainframes was becoming rare.
The next step for IT was Cloud Computing which is more like outsourcing of Software and Hardware infrastructure of a company thus moving it from a capital expenditure to a revenue expenditure. Cloud service providers by the virtue of economies of scale and continuous investment in infrastructure could over a cost advantage (as per Moore’s Law). The firm used steps like CA Technologies MVP to transfer knowledge to new systems and workers along with ensuring that clients extracted the full benefits of Mainframe 2. 0. This increased the customer satisfaction and renewal rates but CA knew that movement to Cloud was inevitable.
But the company was ill-equipped due to the compartmentalized organization structure. Thus began the organization re-structuring to align to Customer needs i. e. from product focus to customer focus. The company, however, is in a quandary w. r. t. its stance on the emerging technology of Cloud computing when its mainframe business was continuing to grow. In my view, the current strategy should be to cater to the $300 mil to $ 2 bil companies through cloud computing and the larger companies through the traditional Mainframe approach due to issues like security and legacy data migration in the latter.